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AVERY DENNISON CORPORATION,
Plaintiff-Counter-Defendant-
Appellee,
No. 98-55810
v.
D.C. No.
JERRY SUMPTON, Individually d/b/a
CV-97-00407-JSL
Free View Listings Ltd.; FREE
VIEW LISTINGS, LTD., an Unknown                       OPINION
Entity,
Defendants-Counter-Claimants-
Appellants.

Appeal from the United States District Court
for the Central District of California
J. Spencer Letts, District Judge, Presiding

Argued and Submitted
June 8, 1999--Pasadena, California

Filed August 23, 1999

Before: Dorothy W. Nelson, Stephen Reinhardt, and
Stephen S. Trott, Circuit Judges.

Opinion by Judge Trott

_________________________________________________________________

COUNSEL

G. Gervaise Davis, III, Davis & Schroeder, Monterey, Cali-
fornia, for the defendants-counter-claimants-appellants.

Adrian Mary Pruetz (Argued), and David W. Quinto (On the
Briefs), Quinn Emanuel Urquhart Oliver & Hedges, Los
Angeles, California, for the plaintiff-counter-defendant-
appellee.

_________________________________________________________________

OPINION

TROTT, Circuit Judge:

Jerry Sumpton and Freeview Listings Ltd. (together,
"Appellants") appeal an injunction in favor of Avery Denni-
son Corp., entered after summary judgment for Avery Denni-
son on its claims of trademark dilution under the Federal
Trademark Dilution Act of 1995, 15 U.S.C. S 1125(c) (Supp.
II 1996) (amending the Lanham Trademark Act of 1946, 15
U.S.C. SS 1051-1127 (1994)), and the California dilution stat-
ute, Cal. Bus. & Prof. Code S 14330 (West 1987). The district
court published an opinion, 999 F. Supp. 1337 (C.D. Cal.
1998), holding that Appellants' maintenance of domain name
registrations for <avery.net> and <dennison.net> diluted two
of Avery Dennison's separate trademarks, "Avery " and
"Dennison." (Note that when referencing Internet addresses,
domain-name combinations, e-mail addresses, and other
Internet-related character strings, we use the caret symbols
("< >"), in order to avoid possible confusion.) The district
court then entered an injunction ordering Appellants to trans-
fer the domain-name registrations to Avery Dennison in
exchange for $300 each.

We have jurisdiction under 28 U.S.C. S 1291 (1994).
Because Avery Dennison failed to create a genuine issue of
fact on required elements of the dilution cause of action, we
reverse and remand with instructions to enter summary judg-
ment for Appellants and to consider Appellants' request for
attorneys' fees in light of this decision.

I

Background

We are the third panel of this court in just over a year faced
with the challenging task of applying centuries-old trademark
law to the newest medium of communication -- the Internet.
(See Brookfield Communications, Inc. v. West Coast Ent.
Corp., 174 F.3d 1036 (9th Cir. 1999), and Panavision Int'l,
L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998).) Although we
attempt to set out the background facts as clearly as possible,
the interested reader may wish to review some of the follow-
ing sources for a more complete understanding of the Internet:
Brookfield, 174 F.3d at 1044-45; Intermatic, Inc. v. Toeppen,
947 F. Supp. 1227, 1230-32 (N.D. Ill. 1996); and Marshall
Leaffer, Domain Names, Globalization and Internet
Commerce, 6 Ind. J. Global Legal Stud. 139, 139-46 (1998).

Two communicative functions of the Internet are relevant
to this appeal: the capacity to support web sites and the corol-
lary capacity to support electronic mail ("e-mail"). A web
site, which is simply an interactive presentation of data which
a user accesses by dialing into the host computer, can be cre-
ated by any user who reserves an Internet location -- called
an Internet protocol address -- and does the necessary pro-
gramming. Because an Internet protocol address is a string of
integer numbers separated by periods, for example,
<129.137.84.101>, for ease of recall and use a user relies on
a "domain-name combination" to reach a given web site. The
registrar of Internet domain names, Network Solutions, Inc.
("NSI"),1 maintains a database of registrations and translates
entered domain-name combinations into Internet protocol
addresses. When accessing a web site, a user enters the char-
acter string <http://www.>,2 followed by the reserved domain-
name combination. The domain-name combination must
include a top-level domain ("TLD"), which can be <.com>,
<.net>, <.org>, <.gov> or <.edu>, among others, although
some, like <.gov> and <.edu>, are reserved for specific pur-
poses. The combination also includes a second-level domain
("SLD"), which can be any word not already reserved in com-
bination with the TLD.3 Once a domain-name combination is
reserved, it cannot be used by anybody else, unless the first
registrant voluntarily or otherwise relinquishes its registration.

A web site can be programmed for multiple purposes.
Some merchants maintain a form of "electronic catalog" on
the Internet, permitting Internet users to review products and
services for sale. A web site can also be programmed for e-
mail, where the provider licenses e-mail addresses in the for-
mat <alias@SLD.TLD>, with <alias> selected by the e-mail
user. A person or company maintaining a web site makes
money in a few different ways. A site that aids in marketing
goods and services is an asset to a merchant. E-mail providers
make money from licensing fees paid by e-mail users. Money
is also made from advertising and links to other web sites.

II

Facts

Sumpton is the president of Freeview, an Internet e-mail
provider doing business as "Mailbank." Mailbank offers
"vanity" e-mail addresses to users for an initial fee of $19.95
and $4.95 per year thereafter, and has registered thousands of
domain-name combinations for this purpose. Most SLDs that
Mailbank has registered are common surnames, although
some represent hobbies, careers, pets, sports interests, favorite
music, and the like. One category of SLDs is titled "Rude"
and includes lewd SLDs, and another category, titled
"Business," includes some common trademark SLDs. Mail-
bank's TLDs consist mainly of <.net> and <.org>, but some
registered domain name combinations, including most in the
"Business" and "Rude" categories, use the TLD <.com>.
Mailbank's surname archives include the domain-name com-
binations <avery.net> and <dennison.net>.

Avery Dennison sells office products and industrial fasten-
ers under the registered trademarks "Avery" and "Dennison,"
respectively. "Avery" has been in continuous use since the
1930s and registered since 1963, and "Dennison" has been in
continuous use since the late 1800s and registered since 1908.
Avery Dennison spends more than $5 million per year adver-
tising its products, including those marketed under the sepa-
rate "Avery" and "Dennison" trademarks, and the company
boasts in the neighborhood of $3 billion in sales of all of its
trademarks annually. No evidence indicates what percentage
of these dollar figures apply to the "Avery" or "Dennison"
trademarks. Avery Dennison maintains a commercial pres-
ence on the Internet, marketing its products at <avery.com>
and <averydennison.com>, and maintaining registrations for
several other domain-name combinations, all using the TLD
<.com>.

Avery Dennison sued Appellants, alleging trademark dilu-
tion under the Federal Trademark Dilution Act and California
Business and Professional Code S 14330. Avery Dennison
also sued NSI, alleging contributory dilution and contributory
infringement. The district court granted summary judgment to
NSI on Avery Dennison's claims. The district court then con-
cluded as a matter of law that the disputed trademarks were
famous and denied summary judgment to Appellants and
granted summary judgment to Avery Dennison on its dilution
claims, entering an injunction requiring Appellants to transfer
the registrations to Avery Dennison. 983 F. Supp. at 1342.

III

Trademark Law

Trademark protection is "the law's recognition of the psy-
chological function of symbols." Mishawaka Rubber &
Woolen Mfg. Co. v. S.S. Kresge Co., 
316 U.S. 203
, 205
(1942). Two goals of trademark law are reflected in the fed-
eral scheme. On the one hand, the law seeks to protect con-
sumers who have formed particular associations with a mark.
On the other hand, trademark law seeks to protect the invest-
ment in a mark made by the owner. Qualitex Co. v. Jacobson
Prods. Co., 
514 U.S. 159, 163
 -64 (1995).

Until recently, federal law provided protection only against
infringement of a registered trademark, or the unregistered
trademark analog, unfair competition. See SS 32 & 43(a) of
the Lanham Trademark Act of 1946, as amended, 15 U.S.C.
SS 1114, 1125(a) (1994). These causes of action require a
plaintiff to prove that the defendant is using a mark confus-
ingly similar to a valid, protectable trademark of the plain-
tiff's. Brookfield, 174 F.3d at 1046.

[1] Many states, however, have long recognized another
cause of action designed to protect trademarks: trademark
dilution. Lori Krafte-Jacobs, Comment, Judicial Interpreta-
tion of the Federal Trademark Dilution Act of 1995 , 66 U.
Cin. L. Rev. 659, 660-62 (1998) (discussing the evolution of
the dilution doctrine). With the 1995 enactment of the Federal
Trademark Dilution Act, dilution became a federal-law
concern. Unlike infringement and unfair competition laws, in
a dilution case competition between the parties and a likeli-
hood of confusion are not required to present a claim for
relief. See 15 U.S.C. S 1127 (Supp. II 1996) (definition of
"dilution"); Leslie F. Brown, Note, Avery Dennison Corp. v.
Sumpton, 14 Berkeley Tech. L.J. 247, 249 (1999). Rather,
injunctive relief is available under the Federal Trademark
Dilution Act if a plaintiff can establish that (1) its mark is
famous; (2) the defendant is making commercial use of the
mark in commerce; (3) the defendant's use began after the
plaintiff's mark became famous; and (4) the defendant's use
presents a likelihood of dilution of the distinctive value of the
mark. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1324
(9th Cir. 1998) (interpreting 15 U.S.C. S 1125(c)(1)).

[2] California's dilution cause of action is substantially
similar, providing relief if the plaintiff can demonstrate a
"[l]ikelihood of injury to business reputation or of dilution of
the distinctive quality of a mark . . . , notwithstanding the
absence of competition between the parties or the absence of
confusion as to the source of goods or services. " Cal. Bus. &
Prof. Code S 14330. We have interpreted  S 14330, like the
Federal Trademark Dilution Act, to protect only famous
marks. Fruit of the Loom, Inc. v. Girouard, 994 F.2d 1359,
1362-63 (9th Cir. 1993); see 3 J. Thomas McCarthy,
Trademarks & Unfair Competition S 24:108 (Supp. 1998).

IV

Standard of Review

We review the district court's grant of a permanent injunc-
tion de novo. Erickson v. United States ex rel. Dep't of Health
& Human Servs., 67 F.3d 858, 861 (9th Cir. 1995). To deter-
mine the legality of the injunction, we consider de novo the
underlying grant of summary judgment to Avery Dennison
and denial of summary judgment to Appellants. See Margolis
v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998). Viewing the evi-
dence in the light most favorable to the non-moving party,
summary judgment is appropriate if no genuine issues of
material fact exist and the moving party is entitled to judg-
ment as a matter of law. Id.

V

Dilution Protection

We now turn to the dilution causes of action at issue in this
case, brought under the Federal Trademark Dilution Act and
California Business and Professional Code S 14330.

In Panavision, we held that both the Federal Trademark
Dilution Act and S 14330 were implicated when the defendant
registered domain-name combinations using famous trade-
marks and sought to sell the registrations to the trademark
owners. 141 F.3d at 1318, 1327. Three differences made
Panavision easier than the instant case. First, the defendant
did not mount a challenge on the famousness prong of the
dilution tests. Panavision, 141 F.3d at 1324. Second, the
Panavision defendant did not challenge the factual assertion
that he sought to profit by arbitrage with famous trademarks.
Id. at 1324-25. Third, the diluting registrations in Panavision
both involved the TLD <.com>. In the instant case, by con-
trast, Appellants contest Avery Dennison's claim of famous-
ness, Appellants contend that the nature of their business
makes the trademark status of "Avery" and "Dennison" irrele-
vant, and the complained-of registrations involve the TLD
<.net>.

A

Famousness

The district court considered evidence submitted by Avery
Dennison regarding marketing efforts and consumer associa-
tion with its marks and concluded as a matter of law that
"Avery" and "Dennison" were famous marks entitled to dilu-
tion protection. 999 F. Supp. at 1339. We hold that Avery
Dennison failed to create a genuine issue of fact on the
famousness element of both dilution statutes.4

Dilution is a cause of action invented and reserved for a
select class of marks -- those marks with such powerful con-
sumer associations that even non-competing uses can impinge
on their value. See generally Frank L. Schechter, The Rational
Basis for Trademark Protection, 40 Harv. L. Rev. 813 (1927)
(proposing a cause of action for dilution); Krafte-Jacobs,
supra, at 689-91. Dilution causes of action, much more so
than infringement and unfair competition laws, tread very
close to granting "rights in gross" in a trademark. See 3
McCarthy, supra, S 24:108. In the infringement and unfair
competition scenario, where the less famous a trademark, the
less the chance that consumers will be confused as to origin,
see AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir.
1979), a carefully-crafted balance exists between protecting a
trademark and permitting non-infringing uses. In the dilution
context, likelihood of confusion is irrelevant. See 15 U.S.C.
S 1127; Cal. Bus. & Prof. Code S 14330; Panavision, 141
F.3d at 1326. If dilution protection were accorded to trade-
marks based only on a showing of inherent or acquired dis-
tinctiveness, we would upset the balance in favor of over-
protecting trademarks, at the expense of potential non-
infringing uses. See Fruit of the Loom, 994 F.2d at 1363
("[The plaintiff] would sweep clean the many business uses
of this quotidian word.").

We view the famousness prong of both dilution analyses as
reinstating the balance -- by carefully limiting the class of
trademarks eligible for dilution protection, Congress and state
legislatures granted the most potent form of trademark protec-
tion in a manner designed to minimize undue impact on other
uses. See San Francisco Arts & Athletics, Inc. v. United States
Olympic Comm., 
483 U.S. 522
, 564 n.25 (1987) (Brennan, J.,
dissenting) (citing 2 J. McCarthy, Trademarks & Unfair
Competition S 24:16, at 229 (2d ed. 1984)) (discussing limits
on the dilution doctrine that help prevent overprotection of
trademarks).

Therefore, to meet the "famousness" element of protection
under the dilution statutes, " `a mark[must] be truly promi-
nent and renowned.' " I.P. Lund Trading ApS v. Kohler Co.,
163 F.3d 27, 46 (1st Cir. 1998) (quoting 3 McCarthy, supra,
S 24.91). In a 1987 report, which recommended an amend-
ment to the Lanham Act to provide a federal dilution cause of
action, the Trademark Review Commission of the United
States Trademark Association emphasized the narrow reach
of a dilution cause of action: "We believe that a limited cate-
gory of trademarks, those which are truly famous and 
registered,5 are deserving of national protection from
dilution." Trademark Review Commission, Report &
Recommendations, 77 Trademark Rep. 375, 455 (Sept.-Oct.
1987).

[3] The Federal Trademark Dilution Act lists eight non-
exclusive considerations for the famousness inquiry, 15
U.S.C. S 1125(c)(1)(A)-(H), which are equally relevant to a
famousness determination under Business and Professional
Code S 14330, see Panavision, 141 F.3d at 1324
("Panavision's state law dilution claim is subject to the same
analysis as its federal claim."). These are:
       (A) the degree of inherent or acquired distinctiveness
       of the mark;

       (B) the duration and extent of use of the mark in
       connection with the goods or services with which the
       mark is used;

       (C) the duration and extent of advertising and public-
       ity of the mark;

       (D) the geographical extent of the trading area in
       which the mark is used;

       (E) the channels of trade for the goods or services
       with which the mark is used;

       (F) the degree of recognition of the mark in the trad-
       ing areas and channels of trade used by the mark's
       owner and the person against whom the injunction is
       sought;

       (G) the nature and extent of use of the same or simi-
       lar marks by third parties; and

       (H) whether the mark was registered . . . on the prin-
       cipal register.

15 U.S.C. S 1125(c)(1).

[4] We note the overlap between the statutory famousness
considerations and the factors relevant to establishing
acquired distinctiveness, which is attained "when the purchas-
ing public associates the [mark] with a single producer or
source rather than just the product itself." First Brands Corp.
v. Fred Meyer, Inc., 809 F.2d 1378, 1383 (9th Cir. 1987).
Proof of acquired distinctiveness is a difficult empirical
inquiry which a factfinder must undertake, Taco Cabana Int'l,
Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1119-20 & n.7 (5th
Cir. 1991), aff'd, 
505 U.S. 763
 (1992), considering factors
including:

       [1] whether actual purchasers . . . associate the
       [mark] with [the plaintiff]; [2] the degree and man-
       ner of [the plaintiff's] advertising; [3 ] the length and
       manner of [the plaintiff's] use of the [mark]; and [4]
       whether [the plaintiff's] use of the [mark ] has been
       exclusive.

Clamp Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 517 (9th Cir.
1989).6 Furthermore, registration on the principal register
creates a presumption of distinctiveness -- in the case of a
surname trademark, acquired distinctiveness.  15 U.S.C.
S 1057(b) (1994); Americana Trading Inc. v. Russ Berrie &
Co., 966 F.2d 1284, 1287 (9th Cir. 1992) ("[R]egistration car-
ries a presumption of secondary meaning.").

[5] However, the Federal Trademark Dilution Act and
Business and Professional Code S 14330 apply "only to those
marks which are both truly distinctive and famous, and there-
fore most likely to be adversely affected by dilution." S. Rep.
No. 100-515, at 42 (emphasis added). The Trademark Review
Commission stated that "a higher standard must be employed
to gauge the fame of a trademark eligible for this extraordi-
nary remedy." 77 Trademark Rep. at 461. Thus,"[t]o be capa-
ble of being diluted, a mark must have a degree of
distinctiveness and `strength' beyond that needed to serve as
a trademark." 3 McCarthy, supra, S 24:109; see also Krafte-
Jacobs, supra, at 690 ("If all marks are distinctive, and a
showing of distinctiveness meets the element of fame, what
marks would be outside the protection of the FTDA?[T]he
FTDA does not indicate that any particular degree of distinc-
tiveness should end the inquiry." (interpreting the Federal
Trademark Dilution Act)). We have previously held likewise
under California Business and Professional CodeS 14330.
Accuride Int'l, Inc. v. Accuride Corp., 871 F.2d 1531, 1539
(9th Cir. 1989) (requiring more than mere distinctiveness).

Applying the famousness factors from the Federal Trade-
mark Dilution Act to the facts of the case at bench, we con-
clude that Avery Dennison likely establishes acquired
distinctiveness in the "Avery" and "Dennison" trademarks,
but goes no further. Because the Federal Trademark Dilution
Act requires a showing greater than distinctiveness to meet
the threshold element of fame, as a matter of law Avery Den-
nison has failed to fulfill this burden.

1

Distinctiveness

[6] We begin with the first factor in the statutory list:
"inherent or acquired distinctiveness." S 1125(c)(1)(A). No
dispute exists that "Avery" and "Dennison " are common sur-
names -- according to evidence presented by Appellants,
respectively the 775th and 1768th most common in the United
States. A long-standing principle of trademark law is the right
of a person to use his or her own name in connection with a
business. See Howe Scale Co. v. Wyckoff, Seamans &
Benedict, 
198 U.S. 118, 140
  (1905). This principle was incor-
porated into the Lanham Act, which states that a mark that is
"primarily merely a surname" is not protectable unless it
acquires secondary meaning. 15 U.S.C. S 1052(e)(4), (f)
(1994); Abraham Zion Corp. v. Lebow, 761 F.2d 93, 104 (2d
Cir. 1985); see L.E. Waterman Co. v. Modern Pen Co., 235
U.S. 88, 94 (1914) (pre-Lanham Act case stating that protec-
tion from confusion is available to the holder of a surname
trademark that has acquired public recognition); Horlick's
Malted Milk Corp. v. Horluck's, Inc., 59 F.2d 13, 15 (9th Cir.
1932) (pre-Lanham Act case limiting the defendant's right to
use his surname as a trademark where the name had acquired
public recognition from the efforts of a competitor). Avery
Dennison cannot claim that "Avery" and "Dennison" are
inherently distinctive, but must demonstrate acquired distinc-
tiveness through secondary meaning.

The drafters of the Federal Trademark Dilution Act contin-
ued the concern for surnames when adding protection against
trademark dilution to the federal scheme. On early consider-
ation of the Act, the report from the Senate Judiciary Commit-
tee emphasized: "[T]he committee intended to give special
protection to an individual's ability to use his or her own
name in good faith." S. Rep. No. 100-515, at 43 (1988). The
Federal Trademark Dilution Act imports, at a minimum, the
threshold secondary-meaning requirement for registration of
a surname trademark.

[7] Avery Dennison maintains registrations of both
"Avery" and "Dennison" on the principal register, prima facie
evidence that these marks have achieved the secondary mean-
ing required for protection from infringement and unfair com-
petition. See Americana Trading, 966 F.2d at 1287. We reject
Appellants' argument that the distinctiveness required for
famousness under the Federal Trademark Dilution Act is
inherent, not merely acquired distinctiveness. See 15 U.S.C.
S 1125(c)(1)(A) (referring to "inherent or acquired
distinctiveness"). However, because famousness requires a
showing greater than mere distinctiveness, the presumptive
secondary meaning associated with "Avery" and "Dennison"
fails to persuade us that the famousness prong is met in this
case.

2

Overlapping Channels of Trade

[8] We next consider the fifth and sixth factors of the statu-
tory inquiry: the channels of trade for the plaintiff's goods and
the degree of recognition of the mark in the trading areas and
channels of trade used by plaintiff and defendant.
S 1125(c)(1)(E), (F). The drafters of the Federal Trademark
Dilution Act broke from the Trademark Review Commis-
sion's recommendation that only marks "which have become
famous throughout a substantial part of the United States"
could qualify for protection. Report & Recommendation, 77
Trademark Rep. at 456. Instead, fame in a localized trading
area may meet the threshold element under the Act if plain-
tiff's trading area includes the trading area of the defendant.
S. Rep. No. 100-515, at 43; Washington Speakers Bureau,
Inc. v. Leading Auths., Inc., 33 F. Supp. 2d 488, 503-04 (E.D.
Va. 1999) (citing I.P. Lund, 163 F.3d at 46; Teletech Cus-
tomer Care Mgt., Inc. v. TeleTech Co., 977 F. Supp. 1407,
1413 (C.D. Cal. 1997)). The rule is likewise for specialized
market segments: specialized fame can be adequate only if the
"diluting uses are directed narrowly at the same market
segment." Washington Speakers, 33 F. Supp. 2d at 503. No
evidence on the record supports Avery Dennison's position on
these two prongs of the famousness inquiry.

[9] In Teletech, fame in a narrow market segment was pres-
ent when the plaintiff showed "that the Teletech Companies
may be the largest provider of primarily inbound integrated
telephone and Internet customer care nationwide. " 977 F.
Supp. at 1409. The defendant was "a contractor providing
engineering and installation services to the telecommunica-
tions industry," and maintained the domain-name combina-
tion, <teletech.com>. Id. at 1409-10. The court held that the
showing on the threshold element under the Federal Trade-
mark Dilution Act was adequate to qualify for a preliminary
injunction. Id. at 1413. In Washington Speakers, both the
plaintiff and defendant were in the business of scheduling
speaking engagements for well-known lecturers. 33 F. Supp.
2d at 490, 503 & n.31 (citing cases). In the instant case, by
contrast, Appellants' sought-after customer base is Internet
users who desire vanity e-mail addresses, and Avery Denni-
son's customer base includes purchasers of office products
and industrial fasteners. No evidence demonstrates that Avery
Dennison possesses any degree of recognition among Internet
users or that Appellants direct their e-mail services at Avery
Dennison's customer base.

3

Use of the Marks by Third Parties

[10] The seventh factor, "the nature and extent of use of the
same . . . marks by third parties," S 1125(c)(1)(G), undercuts
the district court's conclusion as well. All relevant evidence
on the record tends to establish that both "Avery " and
"Dennison" are commonly used as trademarks, both on and
off of the Internet, by parties other than Avery Dennison. This
evidence is relevant because, when "a mark is in widespread
use, it may not be famous for the goods or services of one
business." Report & Recommendation, 77 Trademark Rep. at
461; see Accuride, 871 F.2d at 1539 (affirming the district
court's holding that widespread use of elements of a trade-
mark helped to defeat a dilution claim).

The record includes copies of five trademark registrations
for "Avery" and "Averys," a computer printout of a list of
several businesses with "Avery" in their names who market
products on the Internet, and a list of business names includ-
ing "Avery," which, according to a declaration submitted by
NSI, is a representative sample of over 800 such businesses.
The record also contains a computer printout of a list of sev-
eral businesses with "Dennison" in their names which market
products on the Internet and a list of business names including
"Dennison," a representative sample of over 200 such busi-
nesses. Such widespread use of "Avery" and "Dennison"
makes it unlikely that either can be considered a famous mark
eligible for the dilution cause of action.

4

Other Famousness Factors

[11] Avery Dennison argues that evidence of extensive
advertising and sales, international operations, and consumer
awareness suffices to establish fame. We agree that the
remaining four statutory factors in the famousness inquiry
likely support Avery Dennison's position. Both "Avery" and
"Dennison" have been used as trademarks for large fractions
of a century and registered for decades. Avery Dennison
expends substantial sums annually advertising each mark,
with some presumable degree of success due to Avery Denni-
son's significant annual volume of sales. In addition, Avery
Dennison markets its goods internationally. See 15 U.S.C.
S 1125(c)(1)(B)-(D), (G). However, we disagree that Avery
Dennison's showing establishes fame.

Avery Dennison submitted three market research studies
regarding perceptions of the "Avery" and "Avery Dennison"
brands. Discussion groups through which one study was con-
ducted were formed "using Avery client lists, " and produced
the conclusion that the "Avery" name has "positive associa-
tions . . . among current customers." Surveyed persons in the
other two studies were mostly "users and purchasers of office
products" and "[o]ffice supply consumers. " The one con-
sumer group that did not necessarily include office supply
purchasers for businesses was still required to be "somewhat"
or "very" familiar with Avery products in order to be counted.

[12] Avery Dennison's marketing reports are comparable to
a survey we discussed in Anti-Monopoly, Inc. v. General Mills
Fun Group, Inc., 684 F.2d 1316 (9th Cir. 1981), proving only
the near tautology that consumers already acquainted with
Avery and Avery Dennison products are familiar with Avery
Dennison. See id. at 1323-24. The marketing reports add noth-
ing to the discussion of whether consumers in general have
any brand association with "Avery" and "Avery Dennison,"
and no evidence of product awareness relates specifically to
the "Dennison" trademark. Although proper consumer sur-
veys might be highly relevant to a showing of fame, we reject
any reliance on the flawed reports submitted by Avery Denni-
son.

[13] Finally, Avery Dennison -- like any company market-
ing on the Internet -- markets its products worldwide. See 15
U.S.C. S 1125(c)(1)(D). By itself, this factor carries no
weight; worldwide use of a non-famous mark does not estab-
lish fame. Because famousness requires more than mere dis-
tinctiveness, and Avery Dennison's showing goes no further
than establishing secondary meaning, we hold that Avery
Dennison has not met its burden to create a genuine issue of
fact that its marks are famous. Avery Dennison's failure to
fulfill its burden on this required element of both dilution
causes of action mandates summary judgment for Appellants.

5

Likelihood of Confusion Remains Irrelevant

[14] We recognize that our discussion of the breadth of
fame and overlapping market segments begins to sound like
a likelihood of confusion analysis, and we agree with Avery
Dennison that likelihood of confusion should not be consid-
ered under either the Federal Trademark Dilution Act or Busi-
ness and Professional Code S 14330. However, as we discuss
above, the famousness element of the dilution causes of action
serves the same general purpose as the likelihood of confu-
sion element of an infringement or unfair competition analysis
-- preventing the trademark scheme from granting exces-
sively broad protection at the expense of legitimate uses. See
Fruit of the Loom, 994 F.2d at 1363 ("Whittling away will not
occur unless there is at least some subliminal connection in a
buyer's mind between the two parties' uses of their marks.").
The close parallels between the two analyses are therefore not
surprising; nor do they cause us concern.

B

Commercial Use

Addressing the second element of a cause of action under
the Federal Trademark Dilution Act, the district court held
that Appellants' registration of <avery.net> and
<dennison.net> constituted commercial use. 999 F. Supp. at
1339-40. We disagree.

[15] Commercial use under the Federal Trademark Dilution
Act requires the defendant to be using the trademark as a
trademark, capitalizing on its trademark status. See
Panavision, 141 F.3d at 1325. Courts have phrased this
requirement in various ways. In a classic "cybersquatter"
case, one court referenced the defendants "intention to
arbitrage" the registration which included the plaintiff's trade-
mark. Intermatic, 947 F. Supp. at 1239. Another court, whose
decision we affirmed, noted that the defendant "traded on the
value of marks as marks." Panavision Int'l, L.P. v. Toeppen,
945 F. Supp. 1296, 1303 (C.D. Cal. 1996), aff'd , 141 F.3d
1316 (9th Cir. 1998). In our Panavision decision, we consid-
ered the defendant's "attempt to sell the trademarks
themselves." 141 F.3d at 1325.

[16] All evidence in the record indicates that Appellants
register common surnames in domain-name combinations and
license e-mail addresses using those surnames, with the con-
sequent intent to capitalize on the surname status of "Avery"
and "Dennison." Appellants do not use trademarks qua trade-
marks as required by the caselaw to establish commercial use.
Rather, Appellants use words that happen to be trademarks for
their non-trademark value. The district court erred in holding
that Appellants' use of <avery.net> and <dennison.net> con-
stituted commercial use under the Federal Trademark Dilution
Act, and this essential element of the dilution causes of action
likewise mandates summary judgment for Appellants.

C

Dilution

The district court then considered the dilution requirement
under both statutes, holding that Appellants' use of
<avery.net> and <dennison.net> caused dilution, or a likeli-
hood of dilution, of "Avery" and "Dennison. " 999 F. Supp. at
1340-41. We hold that genuine issues of fact on this element
of the causes of action should have precluded summary judg-
ment for Avery Dennison.

Two theories of dilution are implicated in this case. First,
Avery Dennison argues that Appellants' conduct is the cyber-
squatting dilution that we recognized in Panavision. See 141
F.3d at 1326-27. Second, Avery Dennison argues that Appel-
lants' conduct in housing the <avery.net> and <dennison.net>
domain names in the same database as various lewd SLDs
causes tarnishment of the "Avery" and "Dennison" marks.

1

Cybersquatting

[17] Cybersquatting dilution is the diminishment of " `the
capacity of the [plaintiff's] marks to identify and distinguish
the [plaintiff's] goods and services on the Internet.' "
Panavision, 141 F.3d at 1326 (quoting the Panavision district
court, 945 F. Supp. at 1304). We recognized that this can
occur if potential customers cannot find a web page at
<trademark.com>. Id. at 1327; see also Brookfield, 174 F.3d
at 1045 ("The Web surfer who assumes that " `X'.com" will
always correspond to the web site of company X or trademark
X will, however, sometimes be misled."). Dilution occurs
because " `[p]rospective users of plaintiff's services . . . may
fail to continue to search for plaintiff's own home page, due
to anger, frustration or the belief that plaintiff's home page
does not exist.' " Panavision, 141 F.3d at 1327 (quoting Jews
for Jesus v. Brodsky, 993 F. Supp. 282, 306-07 (D.N.J.
1998)).

[18] In the instant case, Appellants registered the TLD
<.net>, rather than <.com>, with the SLDs <avery> and
<dennison>. As we recognized in Panavision, <.net> applies
to networks and <.com> applies to commercial entities. 141
F.3d at 1318. Evidence on the record supports this distinction,
and courts applying the dilution cause of action to domain-
name registrations have universally considered
<trademark.com> registrations. See Brown, Note, supra, at
251-54 (discussing cases); id. at 262-63 (addressing the
<.com> versus <.net> distinction). Although evidence on the
record also demonstrates that the <.com> and <.net> distinc-
tion is illusory, a factfinder could infer that dilution does not
occur with a <trademark.net> registration. This genuine issue
of fact on the question of cybersquatting dilution should have
prevented summary judgment for Avery Dennison.

2

Tarnishment

[19] Tarnishment occurs when a defendant's use of a mark
similar to a plaintiff's presents a danger that consumers will
form unfavorable associations with the mark. See Hasbro,
Inc. v. Internet Ent. Group, Ltd., 40 U.S.P.Q.2d 1479, 1480
(W.D. Wash. 1996) (<candyland.com> as a domain-name
combination for a sexually explicit web site diluted plaintiff's
trademark, "Candyland," for a children's game); 3 McCarthy,
supra, S 24:104. The district court did not reach Avery Denni-
son's claims regarding tarnishment.

[20] Avery Dennison offers, as an alternative ground for
affirming the district court, the fact that Appellants house
<avery.net> and <dennison.net> at the same web site as lewd
domain-name registrations. However, the evidence likewise
indicates that to move from <avery.net> or dennison.net> to
a lewd SLD requires "linking" through the Mailbank home
page, which might remove any association with the "Avery"
and "Dennison" trademarks that the Internet user might have
had. See Fruit of the Loom, 994 F.2d at 1363 (requiring some
connection between the two parties' uses of their marks).
Whether Appellants' use of the registrations presents a danger
of tarnishment is an issue of fact that could not be decided on
summary judgment.

D

Injunction

[21] Under the Federal Trademark Dilution Act and Busi-
ness and Professional Code S 14330, an injunction may issue
if Appellants' conduct dilutes, or is likely to dilute, Avery
Dennison's trademarks. 15 U.S.C. S 1125(c)(1); Cal. Bus. &
Prof. Code S 14330. Actual success on the merits of a claim
is required for a permanent injunction. Walters v. Reno, 145
F.3d 1032, 1048 (9th Cir. 1998). Because we conclude that
the district erred as a matter of law in finding "Avery" and
"Dennison" to be famous and Appellants' use of <avery.net>
and <dennison.net> to be commercial use, and because genu-
ine issues of material fact existed as to whether Appellants'
use of the domain-name registrations dilutes or is likely to
dilute Avery Dennison's marks, the district court necessarily
erred in granting Avery Dennison an injunction.

VI

Attorneys' Fees

Finally, we address Appellants' application for attorneys'
fees. The Lanham Act permits an award of attorneys' fees to
a prevailing party "in exceptional cases." 15 U.S.C. S 1117(a).
Imposition of attorneys' fees is warranted if " `a plaintiff's
case is groundless, unreasonable, vexatious, or pursued in bad
faith.' " Stephen W. Boney, Inc. v. Boney Servs., Inc., 127
F.3d 821, 826-27 (9th Cir. 1997) (quoting Scott Fetzer Co. v.
Williamson, 101 F.3d 549, 555 (8th Cir. 1996)).

As an appellate court, we are ill-equipped to determine
Avery Dennison's motivation for bringing and pursuing this
litigation. We therefore remand the attorneys' fees question to
the district court for determination.

VII

Conclusion

We reverse the district court's summary judgment in favor
of Avery Dennison and remand with instructions to enter
summary judgment for Sumpton and Freeview. We also
remand Appellants' request for attorneys' fees for a determi-
nation by the district court. Finally, we deny Avery Denni-
son's motion to strike portions of Appellants' brief, and we
deny Appellants' request for judicial notice.

REVERSED and REMANDED. the end

_______________________________________________________________

FOOTNOTES

1 At the time of publication of this opinion, NSI is no longer the exclu-
sive registrar of domain names. A new competitive scheme is being imple-
mented by the Commerce Department, and one competitor,
"register.com," is currently in operation. See generally Jeri Clausing,
3-Week Delay in Opening Up Internet Name Registration, N.Y. Times,
June 28, 1999, at B10.
2 Although initial character strings other than <www.> are also used,
see, e.g., Michael K. Lindsey, Just an Address, Los Angeles Daily Journal,
Friday, June 18, 1999, at 7 (citing a web page at <http://wipo2.wipo.int>),
we only consider <www.>, which stands for "World-Wide Web."
3 Some specific "vulgar" words and a few words that are prevented by
federal statute from being used by private entities are not available as
SLDs.
4 Although the famousness of "Avery" and "Dennison" is disputed, no
dispute exists on the third element of dilution under Panavision: Appel-
lants' use must begin after the marks became famous. Any fame that
Avery Dennison's marks have acquired existed before November, 1996,
when Appellants' use began.
5 The Trademark Review Commission's recommended amendment is
very similar to the language of the eventually-enacted Federal Trademark
Dilution Act. The main difference relevant to the famousness inquiry is
that the Commission's recommendation only permitted a cause of action
to the owner of a registered mark, while the owner of any protectable mark
or trade name can bring a cause of action under the enacted version of the
Federal Trademark Dilution Act.
6 The Clamp court specifically discussed a trademark in a product con-
figuration, rather than in a word or symbol, and the First Brands and Two
Pesos courts dealt with trade dress. However, the analysis is the same. See
Two Pesos, Inc. v. Taco Cabana, Inc., 
505 U.S. 763, 768
 -76 (1992)
(applying the rules applicable to unfair competition to trade dress); Clamp
Mfg. Co. v. Enco Mfg. Co., 870 F.2d 512, 515-16 (9th Cir. 1989) (applying
the rule for acquired distinctiveness to the design of a product); see
generally Graeme B. Dinwoodie, Reconceptualizing the Inherent Distinc-
tiveness of Product Design Trade Dress, 75 N.C. L. Rev. 471 (1997) (dis-
cussing the application of trademark infringement and unfair competition
law to product design and trade dress).